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The IRS's Definition of a True Charity

The IRS is a word that sends some people into fear. No one likes to pay taxes, but there is good news about the IRS. Did you know that the IRS is there to help protect you against charity scam organizations? It is true. There have always been laws and rules that help govern what a true charity is and is not, but there have been recent changes to these laws that help put more stringent regulations on charities. This is to help prevent just anyone from taking your money in the name of charity. When it comes time for you to hand over your donation, you will want to make sure that it is a true IRS tax exempt charity, as most of these organizations have more accountability than others.

What is a Charity?

By definition a charity is a group, or organization that is there to promote the public good. Charities are wonderful things and many people are ready to make donations to charities promising to do good in your community. However, it is important that just about anyone can advertise as a charity. This is a loose definition and could easily apply to the kid down the street selling lemonade to help raise money for a school project, or the local low income shelter in your neighborhood that helps assist families in need. However, by IRS definition, a charity has a much more tighter definition.

When you talk about a charity in terms of the Internal Revenue Service, you are talking about a foundation or organization that collects goods and/or money in order to help others and one that has taken the necessary steps to become tax exempt from the IRS. These types of organizations have registered with the federal government under the Income Tax Act for charitable status. In addition, these are most often a religious, medical, educational or governmental institute that is exempt under the IRS code section 501(c)(3).

Are all Charities Made Equally?

You have a big heart, and whether you want to help the animals in need or children in need, you want to make sure that your charity dollars go where they need to go. You may wonder whether or not all charities are created equally. The answer to that is no—they are not all equal and when you want to give, you need to make sure that you are giving to an organization that is real. One thing you can do is to check their tax and IRS status. If you find a charity that is not a 501 tax exempt charity, chances are, they may be taking your money without helping anyone in need. True charitable status under the IRS definitions will allow you to know which charities are legal. In addition, these charities that are tax exempt have the ability to issue you are receipt for you to use as a tax deduction when you file your own taxes.

New Charities:

There are many big name charities that you have probably already heard of and that you know have a wonderful reputation. You can count on giving your donation to these organizations with no problems. But, how about new charities? While there are some scams out there, there are just as many new charities out there that are ready and willing to help others. You should never dismiss these organizations just because they may be new. In fact, many of these will have already applied for IRS status and you can actually contact the IRS to make sure that this new charity is in fact the real deal. You can even log on to the IRS website and sort through the various charities.